Memo Told Prosecutors’ Early Fears That FBI Might Have Bungled Presser Case

Federal prosecutors, struggling to keep their labor fraud case against Teamsters President Jackie Presser alive at a time when they still had not been told the full truth about the FBI’s role in the controversial affair, warned in a secret memorandum that the FBI might have created problems that could--and ultimately did--permit the union leader to go free.

Expressing concern that failure to indict Presser could tarnish the integrity of the Justice Department and the Reagan Administration, the prosecutors raised the possibility that FBI agents might have overstepped their authority if they promised the union boss immunity from prosecution.

And, citing intelligence reports that Presser’s influence was waning, they dismissed as “specious” the FBI’s contention that the government could use him to clean up the mob-influenced Teamsters Union--presumably a major reason for giving him immunity.

Three-Year Investigation

The highly confidential memorandum, a portion of which has been obtained by The Times, was written last January and spelled out in detail the evidence amassed against Presser during an almost three-year strike force investigation. It also outlined the charges prosecutors wished to bring against him and discussed unusual problems associated with the case.

In major investigations, such memos are prepared and submitted to Justice Department officials in Washington before indictments can be sought from a grand jury. But in this case, the document--despite its dry legalese--offers dramatic evidence of the prosecutors’ mounting fears that their long effort to bring Presser to justice was slipping into jeopardy.

As it turned out, the prosecutors’ fears were far from groundless: Six months after the memo was written, David Margolis, chief of the Justice Department’s organized crime and racketeering section, ordered prosecutors to drop the investigation.

Illegally Siphoning Money

Moreover, although the FBI had twice denied to prosecutors that Presser was a government informant, subsequent events established that he was. Also, FBI agents had sanctioned Presser’s activities in illegally siphoning money to cronies from his hometown Cleveland local--which led Presser to claim that he had been given immunity from prosecution.

The decision not to seek an indictment--made after Presser’s lawyer argued that the union leader had been authorized by his FBI “handlers” to engage in the payroll-padding scheme--quickly drew charges of bureaucratic incompetence and political favoritism because of Presser’s role as the only major labor leader to support President Reagan.

These charges have sparked a grand jury probe and two congressional investigations.

Since then, the department has gone to extraordinary lengths to keep the prosecution memorandum secret, strictly limiting the number of copies of it and warning prosecutors not to reveal it.

Studied by Grand Jury

The memorandum is a key document being studied by the Cleveland-based grand jury. Margolis declined through a Justice Department spokesman Wednesday to discuss the memo or to answer questions about it.

In the memorandum, strike force officials Steven P. Olah and Stephen H. Jigger took issue with what later became the basis for Margolis’ decision: the disclosure that Presser had served as an FBI informant and his lawyer’s contention that FBI agents had given him permission to siphon about $250,000 in union money to cronies who did no work.

Olah had overall authority over the labor fraud strike force, based in Cleveland and made up of Justice Departments attorneys and Labor Department investigators. Jigger was in charge of the Presser inquiry.

Olah and Jigger contend in the memo that the FBI failed to inform them that Presser was a government informant when their investigation first became public on Nov. 10, 1982. On that date, a search warrant for the headquarters of Presser’s hometown local, Teamsters 507, was unsealed in Cleveland. According to the memo, it revealed “the broad contours” of the investigation.

‘Obvious’ Potential Problem

“Any potential problem was then obvious, but was not brought to the prosecutors’ attention,” the document adds.

In addition, the memo charges, Joseph Griffin, special agent in charge of the FBI’s Cleveland field office at the time, “specifically denied that Presser was an FBI informant” when Olah raised the question immediately after the search took place.

Griffin repeated the denial in May, 1983, to Olah and Donald Wheeler, agent in charge of Labor Department agents who conducted the investigation, the memo adds.

“Should this investigation result in no prosecution due to this attempt at wishing problems away, the integrity of the Administration, the Department of Justice, the Organized Crime Section, the Cleveland Strike Force and the personnel participating in this investigation will be unfairly tarnished,” the memorandum warns.

Endorsement of Reagan

Although the prosecutors did not specify why they thought the Administration’s integrity would be jeopardized, they presumably were referring to the fact that Presser had been the only major labor leader to endorse President Reagan in the 1980 and 1984 elections and has repeatedly met with top White House and Administration officials.

A federal grand jury meeting in Cleveland is seeking to determine whether any top FBI officials knew the extent of the agency’s relationship with Presser and still failed to inform the strike force prosecutors.

Sources have told The Times that the government’s case against Presser unraveled when his lawyer argued that Presser lacked “criminal intent” because the FBI had given him permission to pad the union payroll.

In the memorandum, the prosecutors note that Presser “has vehemently denied that he is an FBI informant”--a denial they contend interferes with the claim that he lacked “criminal intent.”

Immunity Without Approval

The prosecutors raise the possibility, which is under investigation by the grand jury, that FBI agents may have given Presser immunity without the specific approval of their superiors. In such a case, the memo states, courts have held that the department “is not bound by the unauthorized or incorrect statements of its agents.”

The prosecutors also question Presser’s motives for serving as an informant.

They “could be the vehicle for an individual to provide information as he chose for his own purposes, i.e., to insure the prosecution of union rivals,” the memo says.

“Clearly, Presser or any suspected informant receives no (immunity) from entering an informant relationship unless his actions were done for the sole purpose of assisting the government,” the prosecutors write. “In that situation, no criminal intent exists.

‘Right of the Government’

“Short of that, the recognized informer’s (legal) privilege is a right of the government. A source of information has no right to intervene and prevent a prosecution which would reveal his identity,” the memo says.

The prosecutors also attempted to head off the FBI’s argument that Presser should not be indicted because he was providing crucial information about the union.

“Any claim that Presser should not be indicted in order to maintain a high-level source of Teamster information for the FBI or that he will cleanse the union from the inside are also specious,” the memo says.

Robert L. Jackson reported from Cleveland and Ronald J. Ostrow reported from Washington.